Grateful to read such a personal and detailed post. I had a startup that failed myself, back in the long ago, and in retrospect I'm glad that if failed quickly and cleanly. I admire this alternate path though of working your way to a new equilibrium.
The offer from KPCB to let you off the hook for the venture financing is amazing. Is that a common thing to happen? I get why they just wanted to write it off and be done with it, but it still seems like a generous outcome. An undo button!